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How Capitalists Rule/32
The Republocrats Series
Part 32:
THE SECRETARIES OF STATE
By Vince Copeland
William Jennings Bryan's resignation as secretary of state in 1915
marked the definitive end of an era. He left the government because
of his opposition to World War I and his fear that, while President
Woodrow Wilson talked so very pacifistically, he was headed toward
intervention. Bryan later succumbed to Wilson's blandishments, but
that is another story.
Up until this time most of the secretaries of state were leaders of
the losing faction of the party in power. This had the effect of
healing the wounds of internal political battle and holding the
party together. For instance, after James Garfield edged out James
G. Blaine for the Republican nomination for president in 1880, he
then, on assuming the presidency, appointed Blaine secretary of
state. President Benjamin Harrison kept Blaine in the office.
Approximately the same thing had happened earlier when presidents
William Henry Harrison, John Tyler and Millard Fillmore all
appointed Henry Clay.
Practically without exception, all these secretaries were long
holders of elective offices, well schooled in politics and fully
capable in the arts of diplomacy. While this custom had started to
die out even in the 1890s, it appeared that Wilson, with his
appointment of Bryan, was going to revive it.
However, this procedure abruptly ended in 1915. Bryan's
replacement, Robert Lansing, was the son of a banker who married
the daughter of a previous secretary of state. Never elected to
anything, he had been appointed to several important government
commissions as legal counsel.
He served as secretary of state during the crucial years of the
First World War. He was, says Ferdinand Lundberg, in constant touch
with the J.P. Morgan banks during the war.
MODERN SECRETARIES OF STATE
Nearly all the modern-day secretaries, whether or not they had any
experience in political office, have been closely connected to the
biggest bankers and capitalists.
Charles Evans Hughes (1921-25), who followed Lansing, was not
merely a highly successful lawyer and Chief Justice of the Supreme
Court. After running for president in 1916, he was promoted to
chief counsel for Standard Oil.
Henry L. Stimson, secretary of state under Herbert Hoover, was a
first cousin of two partners of Bonbright and Co., a
Morgan-dominated utility company. Stimson, a Republican who had
been secretary of war in the Theodore Roosevelt administration, was
again appointed secretary of war by the Democrat Franklin Roosevelt
in 1933.
As a concession to the Morgans, FDR appointed Edward R. Stettinius,
chairman of U.S. Steel, to be secretary of state during World War
II. Dean Rusk, a career man in the State Department at the time,
thought Stettinius far "too dumb" to be secretary.
John Foster Dulles (1953-1959), the well-known cold war strategist,
was secretary under Eisenhower. He was a Wall Street lawyer
connected to the Rockefellers and had been appointed to several
important commissions before being named secretary. His
appointments included one as U.S. Senator from New York to fill a
vacancy. He served four months until the term was up, then ran for
election and lost. This was his only "elective" office.
Dean Rusk, secretary for Kennedy and Johnson and one of the
architects of the Vietnam War strategy, was a Democrat (a liberal
New Deal Democrat, at that) and, like several other secretaries, a
former director of the Rockefeller Foundation. He had a wide
experience in government, but always as an appointee.
Henry Kissinger, who had been groomed at Harvard by the
Rockefellers, became a star State Department performer in the 1970s
without the slightest concession to being elected to anything. When
Kissinger married a Rockefeller aide, Nelson Rockefeller couldn't
think of any gift more appropriate than a check for $50,000.
George Shultz, secretary under Reagan, was president of the Bechtel
Company, perhaps the biggest construction company in the world.
Before holding that job, he had been dean of the business school of
the University of Chicago, which was founded and subsidized by the
Rockefellers. Bechtel, by the way, is now interlocked with Eastern
capital and cannot be considered a "cowboy" interloper in the field
of government. Several of its executives have been Cabinet
officers.
James Baker III, appointed by George Bush, is the son of the
biggest banker in Houston, Texas. His most outstanding political
qualification seems to have been his role as campaign manager for
Bush in 1988 and previous elections. Like Shultz, he represents new
capital as well as old. In his confirmation hearings it developed
that he was quite a large stockholder in Exxon, the closely held
Rockefeller oil company, thus bridging the gap between Eastern and
"Western" capital.
SECRETARIES OF WAR/DEFENSE
It can be shown that just about the same process has been taking
place with the secretaries of defense, a position created in 1947.
Before that there were only the secretary of war, which meant the
army, and the secretary of the navy. The "Defense" Department now
includes the air force, army, navy and the joint chiefs.
>From the very beginning, the secretaries of defense were recruited
from the biggest Wall Street firms, along with some industrial
giants. The first secretary of defense was James V. Forrestal,
secretary of the navy under Franklin Roosevelt. His main
qualification for that position was his stint as a successful bond
salesman for Dillon, Read & Co.
Louis A. Johnson was secretary of defense under Harry S. Truman
(1949-1950). He served one term in the Virginia legislature. But
mainly he was a bank director who got important appointments in
various administrations, including secretary of war under Franklin
Roosevelt.
Robert A. Lovett (1951-53) first got his "government experience"
with Brown Brothers and Harriman. He then received appointments to
various commissions. When he retired, he was a partner of Harriman,
which by that time had dropped Brown.
Charles E. Wilson (1953-57), president of General Motors, and
Robert McNamara (1961-68), president of the Ford Motor Company, had
been mainly concerned with the production of automobiles in their
apprenticeship for national defense.
Contrary to the post of secretary of state, in the 19th century the
job of secretary of war was not regarded as one requiring a high
caliber of political understanding. Especially after the Civil War,
it was a political plum often given to big wheelers and dealers of
the party faithful who could reward their sponsors in industry with
big war orders.
Of course, the executives of GM and Ford would supposedly forget
their respective companies when it came to war orders. These "whiz
kids," as McNamara was called, were only to give the country the
most efficient and economical defense--a "bigger bang for the
buck," as Wilson of GM put it.
AFTER BRYAN, TAKING NO CHANCES
How is it that secretaries of state, with the power of life and
death over U.S. soldiers, can be appointed from banking and
industry, which are such interested parties to any conflict?
We can speculate that the experience with Bryan in the First World
War brought the real rulers up short.
The age of imperialism was in full swing. The Morgan banks had made
huge loans to England during the war. A number of big industries
were dependent upon English and Allied money to pay for their
prosperity--during and after the war. The question of the world oil
supply, so linked to the Middle East as well as to Texas, Oklahoma,
etc., was now at the very heart of world relations. And the bankers
of Wall Street dominated nearly all the U.S. companies concerned.
Just as bankers often move into a company that faces bankruptcy or
tell a healthy company it's time to expand or contract the business
so as to protect their loans, so the international bankers want to
tell whole countries what to do.
But then the question arises: Which particular banker should be
appointed? How does a president know who is the best bill collector
for U.S. high finance?
Generally speaking, party loyalty now plays only a minor role in
these biggest appointments.
However, the Republicans did nourish a grudge against Averill
Harriman for demonstratively switching his support from the
Republicans to the Democrats in the early 1920s. From then on, this
scion of one of the richest railroad families in the country was
limited to ambassadorial positions and the like. It is thought he
might have made secretary of state if he had remained a Republican.
But he redeemed himself over the years and by sheer
ability--combined with a great deal of money--made his mark on
foreign policy.
AMBASSADORS AND BANKS
Even ambassadors have to be screened by the big banks. Lundberg
says:
"As the rise of international capitalism made certain ambassadorial
posts of vital importance, we find after the 1890s that nearly all
the ambassadors to London, Paris, Tokyo, Berlin, Rome and lesser
foreign capitals are the trusted deputies of the Morgan,
Rockefeller, Mellon and other banking camps." ("America's 60
Families," p. 65)
This was especially true of the post in London, where international
banking was the mainstay of the parasitic old ruling class. But
ambassadorships to many countries may still be obtained simply by
making big contributions to the winning party here.
Some years ago, a heavy contributor sought an ambassadorship to Sri
Lanka (formerly Ceylon). A Senate committee found he did not even
know the name of the prime minister. But it ratified his
appointment anyway.
THE BIG CHANGE
The change in the character of the secretaries of state was only a
reflection of a change in their function, which in turn was due to
a big change in the U.S. economy. This preceded the First World
War, although the war speeded up the process considerably. The war
changed the political map of the world in more ways than one, of
course. But the war itself was a result as well as a cause.
By examining this new function of the State Department, let us try
to determine some of the real causes of the war itself.
Two young radicals wrote about this problem shortly after the war.
They described the Pan American Financial Conference, held in
Washington in May of 1915.
"The conference represented the interests of those bankers who were
ready to invest in foreign loans, the building of railways, canals,
public utilities, and in developing mines and other natural
resources. The purpose of this new type of conference was thus
described by Treasury Secretary William G. McAdoo in greeting the
delegates: 'The time is ripe for the establishment of close
relations between the people of the United States and the nations
of Central and South America.... In a sense, the conference will
partake of the nature of a series of meetings between the official
delegates of the Republics ... and the representatives of the
Secretary of the Treasury.'
"In reality, the bankers were not the representatives of the
secretary of the treasury, it was the secretary of the treasury who
was the representative of the bankers." (Scott Nearing and Joseph
Freeman, "Dollar Diplomacy," pp. 272-73)
By substituting the words secretary of state for secretary of
treasury, the same thing can be said of many similar conferences.
Behind this change was the change in production and the manner in
which most people got their living. The U.S. was evolving from an
agrarian to a manufacturing country; from a great association of
more or less independent individuals to a still greater association
of immense corporations that hired what began to be the majority of
the country as their wage workers.
Foreign commerce, which came to about $93 million in 1880, by 1898
had reached $223 million. This was not due to any inflation of the
dollar, but to the rapid expansion of U.S. companies abroad.
BANKERS STATE THE PROBLEM
The Bankers Trust Company, originally the Astor Trust and, like all
Morgan financial creations, a coalition of some of the biggest and
oldest wealth in the country, explained the above development in
this way:
"In the first century of our national existence, our producers were
primarily concerned with meeting the local demand, which steadily
increased with our enormous growth in population, and were content
to leave the foreign markets to the producers of the older
countries, excepting on those raw materials of which we have always
had a surplus. The tremendous development of our manufactures in
recent years, however, totally changes the aspect of our trade. We
can no longer maintain our conservative attitude of doing business
in our own way and on our own terms. The exigencies of foreign
trade force us not only to meet the requirements as we find them
but to seek the best methods of stimulating the demand for American
products in the markets of South America, Russia and the Orient, if
we would more successfully meet the competition of the European
producers.
"Our prosperity will be permanent only when a market can be found
for all the goods we produce.... In order to keep invested capital
employed at the point of most economical production, by finding a
market for all it can produce, our manufacturers are compelled to
seek constantly greater outlets in foreign trade." (Quoted in
Nearing, pp. 242-43)
It is interesting that we hear this logic practically nowhere in
U.S. history before the 1890s. The age of manufacture is supposed
to be the culprit. But the system of distribution has a good deal
to do with it, too, and the fact that the system became more and
more dominated by monopoly business, higher prices and the demand
for ever greater profits. The earlier farming society demanded
imports far more than it needed exports. And even the slave society
felt little need for expansion abroad, except insofar as it needed
more farmland and more slaves (rather than more markets).
But the new society demanded more government "interference"--that
is, assistance. "Big government" really took over nearly a hundred
years ago. This aspect of big government was not only acceptable
but vitally necessary for big business. The role of the State
Department in it was surprisingly direct.
Right after the war, the armed forces, especially the navy, were
busy all over the globe acting as the arm of the State Department
for the benefit of the business interests.
"In addition to extending commerce through treaties, acquiring
naval bases, establishing recognition, and using the army and navy
to coerce debtors, the United States government has also acted as
a business solicitor for American investors in China, the Near East
and Latin America. Naval intelligence missions sent to various
countries of the world not only report on naval matters but supply
the Department of Commerce with information about opportunities for
investment." ("Dollar Diplomacy," p. 272)
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